Business Directories

Iraq's draft oil law 'needs major work'

Baghdad, May 25, 2011

Iraq must overhaul the draft of its long-delayed oil law but will press ahead with developing its petroleum industry while debate on the divisive legislation drags on, Deputy Prime Minister Hussain al-Shahristani said.

Investors have been waiting for approval of a hydrocarbon law to guarantee a more solid legal framework for exploration. The law has also been seen as pivotal to reconciling Iraq's political factions as the country rebuilds after years of war. But Iraq is nevertheless already developing oilfields, signing billions of dollars in service contracts with international companies, under old legislation.

The draft oil law was approved by the cabinet in 2007 but has faced opposition, mainly from semi-autonomous Kurdistan.

'Frankly, the hydrocarbons draft approved by cabinet in 2007 is not fit to become law. It requires major changes,' Shahristani, who has special responsibility for energy, told Reuters in an interview on Tuesday.

'We signed contracts with global oil majors and no one asked if there is a hydrocarbon law or not,' Shahristani said.

Work began on the law in 2005 under a new constitution. It has remained stymied by differences between majority Arabs and minority Kurds over revenue-sharing and control over some fields in their region.

Besides deciding who controls the country's oil reserves and setting up a new state oil company to oversee the industry nationwide, the law aims to provide a more solid legal framework for attracting foreign investment.-Reuters